What services does an independent audit firm offer their clients?

ASSURANCE AND NON ASSURANCE

 

ASSURANCE

        Assurance services is the type of professional service usually provided by CPA firm. Assurance services can include review of any kind of financial document or transaction, such as a loan, contract or financial website.

·        Attestation service is a type of assurance service in which KAP issues a report on the reliability of an assertion prepared by another party. Attestation services are divided into five categories, namely:

 

1. Audit of Historical Financial Statements

In an audit of historical financial statements, management confirms that the reports have been fairly stated in accordance with generally accepted accounting principles (GAAP). An audit of these financial statements is a form of attestation service in which the auditor issues a written report expressing an opinion on whether the financial statements have been fairly stated in accordance with generally accepted accounting principles. This audit is the most common assurance service provided by Firm.

2. Attestation Regarding Internal Control over Financial Reporting

In the United States, for an attestation of internal control over financial reporting, management confirms that internal control has been developed and implemented following established criteria.

3. Review of Historical Financial Statements

For a review of historical financial statements, management confirms that the report has been fairly stated in accordance with generally accepted accounting principles, as well as an audit. Public accountants only provide a moderate or moderate level of certainty to the review of financial statements when compared to a high level of certainty for audits, so less evidence is needed.

4. Attestation Services Regarding Information Technology

For attestation regarding information technology, management issued various assertions about the reliability and security of electronic information. The growth of Internet technology and e-commerce has created a demand for these types of assurance. Many business functions, such as ordering and payment, are now performed over the Internet or in person between computers using electronic data interchange (EDI). Because transactions and information are shared online and in real-time, businesses are demanding even greater certainty regarding information, transactions, and the security systems that protect them. WebTrust and SysTrust are attestation services developed to meet this assurance need.

5. Other Attestation Services

Public accountants provide many other attestation services, most of which are a natural extension of the audit of historical financial statements, because users want independent assurance regarding other types of information. In each case, the organization being audited must provide an assertion before the accountants can provide the attest. For example, if a bank lends money to a company, the loan agreement may require the company to assign an accountant to provide assurance about the company's adherence to financial terms regarding the loan.

 

NON ASSURANCE

Non Assurance is services produced by a Public Accountant in which he does not provide an opinion, belief or other form of belief. 

1.  Accounting and bookkeeping services :

including preparing financial statements. The Code includes an exception to this prohibition for accounting and bookkeeping services that is of routine and mechanical nature for divisions and related entities if the divisions and the service are immaterial.

2. Valuations services, including tax services involving valuation that have a material effect on the financial statements on which the firm will express an opinion .

3.  Preparing tax calculations of current and deferred tax liabilities (or assets) for the purpose of preparing accounting entries that are material.

4. Tax planning and other tax advisory services when the effectiveness of the tax advice depends on a particular accounting treatment or presentation in the financial statements, and audit team has reasonable doubt as to the appropriateness of the related accounting treatment or presentation and the outcome of the tax advice is material.

5. Tax services that involve assisting in the resolution of tax disputes if the services involve acting as an advocate for the audit client before a public tribunal or court, and the amounts involved are material .

6. Internal audit services relating to :

(a) A significant part of the ICFR;

(b) Financial accounting systems that generate information that is, individually or in the aggregate, material to the client’s records; or

(c) Amounts or disclosures that are, individually or in the aggregate, material to the financial statements.

7.  Information technology (IT) system services involving designing or    implementing IT that form a significant part of the ICFR or generate information that is, individually or in the aggregate, significant to the client’s records .

8.   Legal services that involve acting as General Counsel for legal affairs, and acting in an advocacy roles for an audit client in resolving a dispute or litigation when the amounts involved are material.

9. Recruiting services that in volve acting as a negotiator on the client’s behalf.

10. Recruiting services relating to searching for or seeking out candidates; or undertaking reference checks of prospective candidates, with respect to :

(a) A director or officer of the entity; or

(b) A member of senior management in a position to exert significant influence over the preparation of the client’s accounting records or the financial statements on which the firm will express an opinion.

11. Corporate finance services that involve promoting, dealing in, or underwriting the audit client’s shares .

12. Corporate financial advice where the effectiveness of such advice depends on a particular accounting treatment or presentation in the financial statements and the audit team has reasonable doubt as to appropriateness; and the outcome or consequences of the advice will have a material effect on the financial statements .